The new figure represents an increase over the 28.3 percent "cliff" the Obama administration had relied on when crafting its proposed 2012 budget. That budget, unveiled last month, sets aside $62 billion to keep Medicare payments flat for the next two years; the new estimate means doing so could, in fact, cost a billion dollars more.

Likewise, the 10-year cost of repealing the payment formula is likely to significantly surpass the $369.8 billion estimated in the president's budget. Read the Healthwatch story.

Docs freak out: The latest figures prompted 131 state and specialty medical societies to write to House and Senate leaders urging them to "begin working in a bipartisan, bicameral manner to enact legislation this year that will eliminate Medicare’s sustainable growth rate (SGR) formula and lay the groundwork for adoption of broader physician payment and delivery reforms."

"This cut is the highest ever scheduled under the broken Medicare physician payment system," American Medical Association President Cecil Wilson said in a statement, "and it threatens access to care for our nation's seniors, military families, and the baby boomers now entering Medicare."

Administration outlines flexibility: Federal officials released guidance Thursday on how states can apply for waivers to key provisions of the healthcare reform law, the latest attempt by Democrats to show they're being responsive to states' demands for more flexibility.

The 84-page proposed rule contains information on:

how public input would be gathered before applying for a waiver, through public hearings and the like;

the content of the application, including the specific provisions that would be waived and how the state intends to still meet the law's goals;

quarterly and annual reports tracking affordability, comprehensiveness of coverage, the number of people covered and the impact on the federal deficit; and

criteria that could be used in the evaluation of the waivers while they are in place. Healthwatch has the rundown.

GOP not impressed: "The Administration’s claim that this approach will provide states with ‘flexibility’ is just a buzzword that is wrought with u-turns that lead back to the same place – the federal government," a Ways and Means spokeswoman said in a statement. "The plan still lets the federal government set the rules, the processes and the procedures that the states must follow if they have any hope of getting an exemption, and even if a state meets all the requirements the Obama Administration could still deny the state’s request."

CBO outlines health benefit cuts worth hundreds of billions: The nonpartisan Congressional Budget Office released a list of deficit-cutting options Thursday that includes hundreds of billions in cuts to Medicare and Medicaid.

In its report, CBO says giving states a block grant (indexed to annual increases in the employment cost index) to cover long-term care services in Medicaid — something conservative state leaders have been clamoring for — would shave $287.4 billion off the deficit over 10 years. The next biggest saver, increasing the basic Medicare premium for doctor's visits to 35 percent, would save $241.2 billion. Julian Pecquet has the story.

Defunding decision delayed?: House Republican appropriators, fearing that Democrats and Republicans won't agree to a long-term spending bill before March 18, are preparing a three-week stopgap continuing resolution. Appropriations Chairman Hal Rogers (R-Ky.) said he hopes the measure won't include defunding language for healthcare reform or Planned Parenthood, The Hill's Erik Wasson reports.

AMA says keep MLR as is: The doctors' lobby is fighting back against insurance agents and brokers' efforts to change a healthcare reform regulation they fear pushes them out of the marketplace. The agents and brokers fear the medical-loss ratio rule, which limits how much insurers spend on administrative costs, will marginalize them because the rule considers them an administrative expense.

The agents and brokers want the rule changed, but the American Medical Association recently urged Health and Human Services Secretary Kathleen Sebelius to keep the rule as is. "The brokers’ recommendations would both increase the cost of healthcare coverage and reduce the transparency of the cost of that coverage," the group wrote in a letter.

Oral arguments scheduled: Oral arguments in Liberty University's challenge of the healthcare reform law are now set for May 10 in the 4th Circuit Court of Appeals. A federal judge in November had ruled against Liberty's lawsuit that claimed the reform's requirement for individuals to purchase insurance is unconstitutional.

GOP lawmakers raise concerns over HHS audit: Sen. Tom Coburn (R-Okla.) and Rep. Charles Boustany (R-La.) are "deeply troubled" by an independent audit of the HHS, they wrote in a letter to HHS. The specific areas of needed improvement are "too many to list," but the lawmakers want to hear back by March 31 about the department's plans to improve its accounting systems.

Pelosi confident: In a press conference marking the approaching one-year anniversary of healthcare reform's passage, House Minority Leader Nancy Pelosi (D-Calif.) said she is "confident" the law will largely remain intact. "I feel pretty confident about it because this is a very balanced bill despite the misrepresentations made about it," Pelosi told reporters.

CMS gets new spokesman: The spokesman for Rep. Pete Stark (D-Calif.), Brian Cook, is taking the same job at the Centers for Medicare and Medicaid Services starting March 28, CMS announced Thursday. He replaces Peter Ashkenaz, who's headed to the Food and Drug Administration.

JAMA gets new chief: Boston University's Dr. Howard Bauchner is the new editor-in-chief of the Journal of the American Medical Association.

Friday's agenda:

Hatch prescribes healthcare reform: Senate Finance Committee ranking member Orrin Hatch (R-Utah), speaking to the Hudson Institute, will outline his healthcare priorities and "the need to take a state-based approach to reform." While Republicans truly hate healthcare reform, Hatch has somewhat stood out above the rest recently, having called the law a "dumbass program" and a "piece of crap."

Sebelius, Hamburg on the Hill: HHS Secretary Kathleen Sebelius and Food and Drug Administrator Margaret Hamburg will defend their budgets to House Appropriations subcommittees in the morning. Sebelius will appear before the Labor, Health and Human Services, Education and Related Agencies subcommittee, while Hamburg testifies before the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies subcommittee.

ACOs in Medicaid: With the entire healthcare industry waiting for the accountable care organization regs to finally drop, the Campaign for Better Care will discuss how an ACO is already underway for poor individuals in Camden, N.J. Here's the agenda.

Growing pain: Pain management doctors gear up for a fight in Washington as a state board weighs whether to continue covering spinal injections by state-funded healthcare programs. Meanwhile, a bill in the state legislature would extend the board's coverage guidelines to private plans.

Reading list:

A new poll finds that most Massachusetts residents who receive state-subsidized care like it, the Boston Globewrites.

Pittsburgh Steelers star Hines Ward said he is OK with adding two games onto the NFL season if the league improves its heath insurance, the Pittsburgh Post-Gazettewrites.